Jan 212014
 

Awhile ago I started a swing trade with Potash Corporation of Saskatchewan. I used $600 to purchase about $2,000 worth of POT shares using leverage. Unfortunately some time after my purchase, Russia’s Uralkali got out of the potash cartel which sent the price of potash lower, which of course meant all potash producers around the world had their profits squeezed. Potash is an alkaline potassium compound used in fertilizer.

When I initially bought 45 shares, POT was trading at $43.74 CAD per share. It dropped down to about $30 per share when Uralkali pulled out. But today POT has recovered a bit and is trading at about $37. Instead of selling and taking my losses, I’ve decided to double down on it 🙂 So earlier today I bought another 45 shares at $36.90 each, doubling my total holding to 90 shares, wow 😯

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I should have pulled the trigger earlier but I’m just glad I got in today before the price can get any higher 🙂 Thanks to my new trade I’ve averaged down my ACB from the initial $43.74/share to $40.32/share 😀

I got the idea to increase my position in POT after reading PC’s post about Potash Corp’s recent performance. It’s risky to invest a second time into a company that is worth less than before. There’s a very real possibility for the price to continue falling and I could lose my new money as well my previous investment (o_o) But risky is my middle name and I like to go big or go home 😛

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With a P/E ratio of 15.2x I feel POT is currently at reasonable valuations. It’s also a low cost producer of nitrogen, phosphate, and other chemicals needed for industrial use. Farmers will always need fertilizer as long as there are people in the world, and I think POT is in a great position to capitalize on that market. Also, the 4.09% dividend yield is a nice bonus 🙂

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Random useless fact: If you find a lost driver’s license, you can drop it in any mailbox and the Postal Service will deliver it back to the owner.

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My Own Advisor
01/21/2014 3:09 pm

You don’t hold POT in a USD $$ non-registered account? They pay divis in USD. Just curious….unless you don’t intend to buy and hold and hold this guy like I might be inclined to do with my stuff.

PC
PC
01/21/2014 3:51 pm

Good luck on your swing trade 🙂

Phil
01/21/2014 3:52 pm

Throwing more money at depressed money… What makes you think you are smarter this time around, other than someone elses comments? I know your skull has good goo inside, so it will probably work, but it’s still a risky gamble that I would not think you need to do with all your other investment savvy. I myself have been “playing” with momentum game, so I’m probably doing the same as you, just I haven’t lost money yet.. it’s harder to lose money when it’s not borrow… – Do as I say not as I do, or something like that is what comes to mind? – =P Oh, and your useless fact isn’t so useless… I have had my wallet make it back to me, cash and all twice in my lifetime… so far. – Cheers

Brick By Brick Investing | Marvin
Brick By Brick Investing | Marvin
01/21/2014 5:16 pm

That dividend yield is sweet, I’ve been keeping an eye on Potash for a while now. If there is another financial crash I will be piling into this one!

Investing Pursuits
01/22/2014 8:28 pm

I think Potash has room to grow. You might have to wait for some months to pass, but the dividend yield will make it easier to deal with it. But that is what swing trading is like. It some times takes a while. I am curious to what you profit goal is with this trade.

$25000 dividends
01/24/2014 5:08 am

I bought POT when it was around $43 and then again when it crashed at around $32. My average cost basis is about $37 so i’m about even. Wouldn’t mind adding again if it drops further. I’m holding on to this one for the next 10-20 years.

David
David
01/24/2014 2:57 pm

Potash is something that will not be going away anytime soon. I am accumulating it as it makes its lows. One must be patient and not listen to the experts who tell you to buy then sell from one day to the next. I have amassed almost a million in the past ten years and retired early. I read all the experts but make up my own mind. Sometimes I win, sometimes I lose. One of my tactics is to buy 100 shares of a company, dividends (if it pays them) and sell when I make $500 capital gains.

101 Centavos
01/26/2014 6:08 am

Just an opinion, but I don’t think the current TTM div payout ratio of over 43% is sustainable for a rock miner.